Chindia Alert: You’ll be Living in their World Very Soon
aims to alert you to the threats and opportunities that China and India present. China and India require serious attention; case of ‘hidden dragon and crouching tiger’.
Without this attention, governments, businesses and, indeed, individuals may find themselves at a great disadvantage sooner rather than later.
The POSTs (front webpages) are mainly 'cuttings' from reliable sources, updated continuously.
The PAGEs (see Tabs, above) attempt to make the information more meaningful by putting some structure to the information we have researched and assembled since 2006.
Recently, I noticed that the Indian armybagpipe bands tend to sway as they march. See https://www.youtube.com/watch?v=9fkT6SdD9LQ and https://www.youtube.com/watch?v=fgW0HnY9crA Bands without bagpipes do not sway.
I tried to check via Google if the Pakistani army bagpipe bands did the same and couldn’t find any example. So, my conclusion is that it was not a habit formed during the Raj but developed indigenously after Independence.
So the question: when and why did the Indian army bagpipe bands develop this swaying action?
The country could create sustainable economic conditions in five ways, such as promoting acceptable living standards, improving the urban infrastructure, and unlocking the potential of women.
Twenty-five years ago, India embarked on a journey of economic liberalization, opening its doors to globalization and market forces. We, and the rest of the world, have watched as the investment and trade regime introduced in 1991 raised economic growth, increased consumer choice, and reduced poverty significantly.
Now, as uncertainties cloud the global economic picture, the International Monetary Fund has projected that India’s GDP will grow by 7.4 percent for 2016–17, making it the world’s fastest-growing large economy. India also compares favorably with other emerging markets in growth potential. (Exhibit 1).
The country offers an attractive long-term future powered largely by a consuming class that’s expected to more than triple, to 89 million households, by 2025.Exhibit 1
Liberalization has created new opportunities. The challenge for policy makers is to manage growth so that it creates the basis for sustainable economic performance. Although much work has been done, India’s transformation into a global economic force has yet to fully benefit all its citizens. There’s a massive unmet need for basic services, such as water and sanitation, energy, and health care, for example, while red tape makes it hard to do business. The government has begun to address many of these challenges, and the pace of change could accelerate in coming years as some initiatives gain scale.
From our vantage point, India has an exciting future. In the new McKinsey Global Institute report India’s ascent: Five opportunities for growth and transformation, we look at game-changing opportunities for the country’s economy and the implications for domestic businesses, multinational companies, and the government. The five areas we focus on by no means provide a comprehensive assessment of India’s prospects, but we believe they are among the most significant trends. Foreign and Indian businesses would do well to recognize these opportunities and reflect on how to exploit them.
1. From poverty to empowerment:
Acceptable living standards for allThe trickle-down effect of economic liberalization has lifted millions of Indians from indigence in the past two decades. The official poverty rate declined from 45 percent of the population in 1994 to 22 percent in 2012, but this statistic defines only the most dismal situations. By our broader measure of minimum acceptable living standards—spanning nutrition, water, sanitation, energy, housing, education, and healthcare—we find that 56 percent of Indians lacked the basics in 2012.
The country will need to address these gaps to achieve its potential. The task is certainly within India’s capacity, but policy makers will have to promote an agenda emphasizing job creation, growth-oriented investment, farm-sector productivity, and innovative social programs that help the people who actually need them. The private sector has a substantial role to play both in creating and providing effective basic services.
2. Sustainable urbanization:
Building India’s growth enginesBy 2025, MGI estimates, India will have 69 cities with a population of more than one million each. Economic growth will center on them, and the biggest infrastructure building will take place there. The output of Indian cities will come to resemble that of cities in middle-income nations (Exhibit 2).
In 2030, for example, Mumbai’s economy, a mammoth market of $245 billion in consumption, will be bigger than Malaysia’s today. The next four cities by market size will each have annual consumption of $80 billion to $175 billion by 2030.Exhibit 2To achieve sustainable growth, these cities will have to become more livable places, offering clean air and water, reliable utilities, and extensive green spaces. India’s urban transformation represents a huge opportunity for domestic and international businesses that can provide capital, technology, and planning know-how, as well as the goods and services urban consumers demand.
3. Manufacturing for India, in India
Although India’s manufacturing sector has lagged behind China’s, there will be substantial opportunities to invest in value-creating businesses and to create jobs. India’s appeal to potential investors will be more than just its low-cost labor: manufacturers there are building competitive businesses to tap into the large and growing local market. Further reforms and public infrastructure investments could make it easier for all types of manufacturing businesses—foreign and Indian alike—to achieve scale and efficiency.
4. Riding the digital wave:
Harnessing technology for India’s growthTwelve powerful technologies will benefit India, helping to raise productivity, improving efficiency across major sectors of the economy, and radically altering the provision of services such as education and healthcare. These technologies could add $550 billion to $1 trillion a year of economic value in 2025, according to our analysis, potentially creating millions of well-paying, productive jobs (including positions for people with moderate levels of formal education) and helping millions of Indians to enjoy a decent standard of living.
5. Unlocking the potential of Indian women: If not now, when?
Our research suggests that women now contribute only 17 percent of India’s GDP and make up just 24 percent of the workforce, compared with 40 percent globally. In the coming decade, they will represent one of the largest potential economic forces in the country. If it matched the progress toward gender parity of the region’s fastest-improving country, we estimate that it could add $700 billion to its GDP in 2025. Movement toward closing the gender gap in education and in financial and digital inclusion has begun, but there is scope for further progress.
Public-sector efforts to address the five areas are under way. The government is attempting to improve the investment climate and accelerate job creation—India’s ranking on the World Economic Forum’s Global Competitiveness Report climbed to 55 in 2015–16, from 71 a year earlier. Officials are moving to make the government more efficient, using technology that can leapfrog traditional bottlenecks of a weak infrastructure. One billion Indian citizens, for example, are now registered under Aadhaar, the world’s largest digital-identity program and a potent platform for delivering benefits directly to the poor.
Realizing India’s promise will require national, state, and local leaders to adopt new approaches to governance and the provision of services. To meet the people’s aspirations, these officials will also need new capabilities. The requirements include private sector–style procurement and supply-chain expertise, deep technical skills for planning portfolios of infrastructure investments, and strong project-management capabilities to ensure that large capital projects finish on time and on budget. Training will be needed to help staff members use digital technologies to automate and reengineer processes, manage big data and advanced analytics, and improve interactions among citizens through digitized touchpoints, online-access platforms, portals, and messaging and payment platforms. The government could acquire these capabilities by adopting quality-oriented procurement policies and taking advantage of secondments from the private sector. For businesses, India represents a sizable market but will require a granular strategy and a locally focused operating model.
No single report can capture all the changes taking place in the country, but we have tried here to identify the most significant trends. Foreign and Indian businesses should consider how their strategies will be influenced by them. Policy makers should focus on helping all stakeholders to capitalize on them. By any measure, the challenge is daunting, but success could give a historic boost to India’s economy.
PHOTO: Employees worked on the cabin of a Sikorsky S-92 at the Tata Advanced Systems Ltd. facility at Adibatla in the south Indian city of Hyderabad, June 07, 2016.
Having signed a string of multibillion-dollar orders from foreign firms to make parts for helicopters, jet fighters and trains, India is struggling to find people with the skills to build them.
In a $3.3 billion push, it is racing to equip 15 million people by 2020 with the skills necessary to realize Indian Prime MinisterNarendra Modi’s aim to bring more high-grade manufacturing to the country.
But the challenges are significant at a time when foreign suppliers including Boeing Co., Airbus Group SE and Alstom SA often can’t find the employees with the training and experience to help fulfill Mr. Modi’s ‘Make in India’ program.E
More than 80% of engineers in India are “unemployable”, Aspiring Minds, an Indian employability assessment firm, said in a January report after a study of about 150,000 engineering students in about 650 engineering colleges in the country.
A lack of specialized courses mean companies have to train their own people from scratch. At one training center outside Hyderabad in southern India, young workers in their early 20s toil with high-precision hand tools as they are taught for the first time how to fix rivets on aircraft-grade aluminum sheets as part of a year-long training program.
A group concerned about the safety of India’s cows has embarked on a controversial and ambitious mission this month: counting all the cattle in the state of West Bengal.
“Our aim is to save the cow mother,” said Subrata Gupta, president of the Bengal branch of Cow Development Cell, which used to be associated with Prime Minister Narendra Modi’s ruling Bharatiya Janata Party.
The group will use the data to protect the state’s cows, many of which are being illegally exported to Bangladesh and Pakistan for slaughter, said Mr. Gupta.
The status of cows — an animal deeply revered in Hinduism – is a divisive issue in the country. Critics say conservative Hindu groups, emboldened by the BJP’s power in New Delhi, are eating away at the country’s secular roots by trying to ban beef consumption.
Over the weekend Mr. Modi spoke out against self-styled vigilantes who say they are trying to protect cows. He urged state governments to punish them when they use cow protection as a rationalization for hate crimes.
Cow slaughter is already illegal in many Indian states–including Uttar Pradesh where a Muslim man was killed by a mob last year following rumors he had slaughtered a cow for food.
The eastern state of West Bengal, however, allows the killing of cows during the Islamic religious festival of Eid.
Around 6,000 volunteers from Mr. Gupta’s group are going door-to-door across state to record how many cows each household owns. The group wants to finish the survey before Sept. 12, when Muslims will celebrate Eid.
“Thousands of cows are being smuggled across India’s border into Bangladesh, where they will be slaughtered,” said Mr. Gupta of the Cow Development Cell which has groups apprehending cattle trucks, even though it has no legal authority to do so.
He said activists from the group freed about 40,000 animals last month.
The BJP recently broke ties with Mr. Gupta’s Cow Development Cell.
“It was an all-India decision that a separate cell for cow development is not needed,” said Dilip Ghosh, president of the BJP in West Bengal.
That hasn’t stopped Mr. Gupta and his army of self-styled cow protectors who say they will release the results of the cow census on Sept. 15.
The collapse of a bridge in the western Indian state of Maharashtra this week that left 14 people dead and 18 others missing wasn’t the first road tragedy to hit the area.In 2013, a bus veered off a 80 year-old bridge on the Jagbudi river, which flows parallel to the Savitri about 70 kilometers (43 miles) to the south, killing 37 of the 52 people on board.
That accident happened when a bus flew off the bridge and flipped in midair before landing on its roof 30 feet below.
Such incidents are alarmingly frequent on India’s roads.
India has been spending more money to improve its bridges, ports and airports, but the Savitri accident is yet another example of how the country’s depleted infrastructure is under increasing strain due to the rising demands of a fast-developing economy.
Its ageing road network, the world’s second-largest after the U.S. but largely made of dirt tracks, is particularly challenging. India’s roads are the most dangerous in the world: In 2015, the country accounted for almost one in 10 road casualties world-wide, according to the World Health Organization.
While India reported 137,000 deaths due to road crashes in 2013, the WHO estimated the figure was much higher. Those deaths cause an approximate 3% loss in economic output, it said.
Two buses and a number of cars plunged into the Savitri river in the early hours of Wednesday when the bridge in Mahad, built before India gained independence from Britain in 1947, crumbled into the waters below amid heavy monsoon rains.
Maharashtra Chief Minister Devendra Fadnavis has ordered a judicial probe into the accident and said government technicians will carry out a safety audit of old bridges in the state.
The bodies of 14 people were recovered from the waters of the Savitri by Friday morning, and 18 more are missing, National Disaster Response Force Commandant Anupam Srivastava said.
5 Sectors That Will Benefit From India’s Proposed Tax OverhaulIndia’s upper house of Parliament on Wednesday approved an overhaul of the country’s tax system that, if passed in the lower house, will lead to the implementation of a nationwide goods-and-services tax, or GST.
The GST will make cars more affordable in India as it will reduce the taxes levied on the vehicles.India currently has four factory-gate tax rates of 12%, 24%, 27% and 30%, depending on the vehicle’s specifications. On top of that, there are value-added taxes, which range from 12.5% to 14.5%.
The GST will subsume all theses levies into one and passenger vehicles will likely fall into one of two tax bands: 18% to 20% for regular cars, and up to 40% for luxury autos.
2 Logistics
Haulage and logistics companies will be able to reduce transit hours because the simplified system will mean that their drivers won’t have to wait for so long at borders to pay levies.
Currently, some companies use smaller transporters that charge lower fees because they are able to avoid paying taxes due to the inefficient system. But a more transparent tax system will mean the smaller companies are more likely to pay, leveling the field for larger players.
India’s leading 10 listed logistics companies command less than 5% of the overall market, according to a KPMG report. Stocks of some companies such as AllCargo Logistics Ltd. and Transport Corp of India Ltd. have gained more than 15% in the past month in anticipation of the passage of the GST legislation.
3 Media and entertainment
Cinema multiplex operators now pay entertainment taxes as well as several other levies to federal and state governments. The entertainment tax can be as high as 27% and operators must pay that as well as a service tax of about 15% on advertising revenue.
GST is expected to cut that tax bill, lowering operational costs and boosting margins.
Motilal Oswal Securities says that a GST rate of 18% may improve operating profit of PVR, the largest listed multiplex operator, by as much as 26%.
4 Retail
Consumers’ disposable income is expected to rise in the medium term if the GST rate turns out to be lower than current levies, boosting demand.
A more efficient tax system will also mean that market-stall owners and roadside vendors are more likely to pay tax, analysts say. That will create a more level playing field for larger shops and retailers who already pay.
The retail sector will likely also benefit from lower logistics costs as well as a fall in rental costs. Retailers currently shell out about 10%-15% of their operating expenditure on rent and infrastructure services, on which service tax is levied. But that levy would be reduced post-GST, benefiting retail companies like Future Enterprises Ltd. and Shoppers Stop Ltd.
5 Cement
Overall tax for the cement sector will likely to come down if the GST rate is set at 18%, Kotak Securities says.
After the implementation of the uniform tax, cement companies would likely pay about 920 rupees ($13.78) in tax per ton, down from about 1,320 rupees currently, the broker says. It also expects cement firms to benefit from a more efficient logistics system. This will cut costs for consumers and also help the government achieve its aim to provide housing for all by 2022.
Throughout years of political gridlock, the risk that India might pass its biggest tax reform since independence appeared reassuringly remote for many businesses.
Until now.Suddenly, the prospect that a new Goods and Services Tax (GST) could enter force next year has bosses panicking at the likely impact and seeking advice on how to cope.
The expected passage by parliament on Wednesday of a key constitutional amendment would resolve crucial issues needed to transform India’s $2 trillion economy and 1.3 billion consumers into a single market for the first time.
The amendment is likely to clear the Rajya Sabha after the opposition Congress party, which originally proposed the GST while in power, wrung concessions from Prime Minister Narendra Modi‘s government.
Yet the vote will only fire the starting gun in a legislative marathon in which the national parliament and India’s 29 federal states have to pass further laws determining the – still unknown – rate and scope of the tax.
At the same time, a huge IT system needs to be set up, tax collectors trained and companies brought up to speed on a levy that experts say will force them to overhaul business processes from front to back.
One boss who isn’t ready is G.R. Ralhan, head of Roamer Woollen Mills in the northern city of Ludhiana.
“Companies, particularly smaller ones, are apprehensive,” Ralhan told Reuters, calling for more time to adjust and saying a high rate of GST could put his firm out of business.
Countries that have introduced GST in the past have often faced a relative economic slowdown before the benefits of a unified tax regime feed through.
India is already the world’s fastest growing large economy, expanding by 7.9 percent year-on-year in the March quarter. Economists at HSBC forecast a boost of 0.8 percentage points from the GST within three to five years.
Tax experts say that only 20 percent of – mostly big – firms are getting ready for the GST. The rest are taking things as they come in a country where coping with a changing tax regime has been a way of life for decades.
Yet even those actively preparing must contend with a series of unknowns as the national and state parliaments tackle the task of transforming a “model” GST law into the real thing.
The first hurdle will be for a majority of state parliaments to pass the GST amendment, which would establish a GST Council to finalise key terms of the new tax.
That could take until November and mean that the legislation to put the GST into force would only come before the national parliament’s winter session.
Hitting the government’s target launch date of next April 1, the start of the fiscal year, looks ambitious. Slippage to July or October 2017 is increasingly likely, say experts.
In mid-2013, the trio decided to devise solar air conditioners based on their previous experience in the market but, after some pilots, they discovered the idea was commercially unviable.
From the ashes of their second enterprise, they did manage one small gain — a connected controller that reduced energy use by 30% during the night. Using this, they pushed their entrepreneurial energy in a new direction — towards the rapidly emerging opportunity in the internet of things (IoT) , or devices and objects that send and receive data over the internet. Rather than build large systems for this, their new venture Oakter is thinking much smaller. It is building out a series of IoT-based devices to “smarten” homes across India.
In around two years of operation, Oakter’s controllers have smartened some 10,000 gadgets, claims Shishir Gupta, without disclosing the number of homes his controllers have been installed in currently. The startup’s full launch hasn’t even happened, he says, since it is still reaching out informally to consumers. Around Diwali this year, Oakter is expected to make a big-bang offline launch and expects to reach 10,000 homes in a year and revenues of Rs 100 crore by 2018-19.
“Within 10 years, IoT will transform the way we manage our lives,” says Shishir. There are plenty of data points to back his enthusiasm. In 2008 itself, there were more objects connected to the internet than people, and technology researcher Gartner forecasts that by 2020 there will be nearly 21 billion connected devices. If the ATM was perhaps the first popular connected device in the early 1970s, hundreds of companies have since shown an interest in getting wired up.
IoT’s the Thing
In the US, the largest technology market, there has been a mixed response to various kinds of IoT. According to CB Insights, a tracker of this kind of deal data, deal volume is on track to surpass 2015’s total by 30%. Fundingwise, 2016 should be a robust year for IoT in the West, and the second year in a row of $1.2 billion-plus in funding. Several startups in the field raised significant amount of funding, including IoT software and services company Greenwave Systems ($45 million Series C), commercial drone developer Airware ($30 million Series C), and connected HVAC and lighting company Enlighted ($25 million Series D financing).However, deal flow looked less upbeat on a quarterly basis, with both value and volume declining in the second quarter of 2016. After an increase in the first quarter with 54 transactions, deal-making fell 26% quarter-over-quarter. And funding fell from $328 million to $325 million — a 9% quarter-on-quarter decline. At a global level, there is massive potential.
According to a statement from Gartner’s research chief Peter Sondergaard, the incremental revenue generated by IoT suppliers is estimated to reach $309 billion per year by 2020. This growth opens up new business opportunities, as half will be attributed to new startups and 80% will be in services, not products. Manufacturing, healthcare and insurance are expected to lead the IoT race.
Some of this entrepreneurial interest is being generated in India, too. For example, in May this year, Entrepreneurship and Venture Capital (EVC), an early stage investor, launched a $50 million unit to focus on IT.
Qualcomm Ventures, the VC arm of the global chipmaker, recently unveiled its $150 million India fund and made its first investment of $10 million in healthcare IoT venture Attune Technologies. In early July, a centre of excellence for IoT was launched jointly by software industry lobby Nasscom, the department of electronics and information technology and the Education and Research Network. This centre can house up to 40 startups and the model is expected to be replicated nationwide.
An Indian government body has recommended provisional anti-dumping duty on imports of hot-rolled steel products, a government statement said on Tuesday, to reduce overseas purchases of the alloy and shield local mills.
The anti-dumping duty will come into effect after New Delhi formally notifies the tax.
The Directorate General of Anti Dumping recommended the duties on steel products from China, Japan, South Korea, Russia, Brazil and Indonesia, the statement said.Indian steelmakers such as the Steel Authority of India (SAIL.NS) , JSW Steel (JSTL.NS) and Tata Steel (TISC.NS) had lobbied for protectionist measures to prevent cheap overseas purchases that were undercutting local mills and squeezing margins.
A Donald Trump presidency could help India, according to a panel of India’s top strategic thinkers.
The businessman and television personality, known for his pledge to shake up the global status quo and “make America great again,” could help Indian business by squashing free-trade deals that disadvantage the South Asian nation and while also opening up a larger role for India’s military, speakers at a Brookings India event in Delhi said Monday.
Mr. Trump’s plan to make Asian allies pick up more of the slack for defense spending in the region would “open up a huge amount of space for India” in global affairs, said C. Raja Mohan, director of Carnegie India.
Meanwhile, Mr. Trump’s opposition to the Trans Pacific Partnership would also be a bonus for India, which never signed the deal, said Brookings India’s Harsh V. Singh. Mr. Trump says such deals disadvantage U.S. workers. Many Indian companies “would breathe a sigh of relief” if the trade deal, which favors signatories like Vietnam and Malaysia over India, was squashed, Mr. Singh said.
Mr. Trump has already sent jitters through the Asian security community by saying: “Many countries are not paying their fair share,” for U.S. military protection. By contrast his opponent Hillary Clinton, is seen as someone who would most likely leave relationships unchanged with major allies.
For India, which has no U.S. military bases on its soil, the prospect of life with a diminished American presence in east Asia and the Middle East would mean a sharpening of divisions in the region, but also allow it to expand its influence and invent a new global role for itself, said Mr. Mohan.
The changes could be as large as those that accompanied the withdrawal of the British military from the region post World War II, a shift that saw the birth of modern India in 1947, he said.
Still, if Mr. Trump wins office, he will likely withdraw U.S. support and investment for Indian renewable energy, the Hindustan Times’ Foreign Editor Pramit Pal Chaudhuri said. Protectionist policies could be “a disaster” for the global economy, triggering a spate of trade wars, Mr. Chaudhuri said.
Liberalization has created new opportunities. The challenge for policy makers is to manage growth so that it creates the basis for sustainable economic performance. Although much work has been done, India’s transformation into a global economic force has yet to fully benefit all its citizens. There’s a massive unmet need for basic services, such as water and sanitation, energy, and health care, for example, while red tape makes it hard to do business. The government has begun to address many of these challenges, and the pace of change could accelerate in coming years as some initiatives gain scale.
In 2030, for example, Mumbai’s economy, a mammoth market of $245 billion in consumption, will be bigger than Malaysia’s today. The next four cities by market size will each have annual consumption of $80 billion to $175 billion by 2030.Exhibit 2To achieve sustainable growth, these cities will have to become more livable places, offering clean air and water, reliable utilities, and extensive green spaces. India’s urban transformation represents a huge opportunity for domestic and international businesses that can provide capital, technology, and planning know-how, as well as the goods and services urban consumers demand.
CHINDIA ALERT: You'll be living in their world, very soon 